Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
The AI Litmus Test: Good Businesses are Good Businesses, With or Without AI
NfX | Morgan and Drew Beller | May 12, 2023
Here’s a double-edged sword: It’s never been easier to build in AI.
- AI as a Tool, Not the Core Business: Building a business around artificial intelligence (AI) or GPT4 is exciting, but it's not the end game.
- The true value lies in how AI integrates into the business model to solve problems or scale solutions.
- The success of a company should not hinge solely on its AI capabilities. Instead, AI should enhance a product that's already defensible and loved by users. The main takeaway: Good businesses are good businesses, with or without AI.
See: Successful Startups Have Two Traits in common
- Importance of Correctness Spectrum in AI: AI models are probabilistic and, as such, can sometimes be incorrect.
- It's crucial to understand the acceptable failure rate of your AI product and its implications for your target users.
- Establishing an operational design domain (ODD) can help you validate the correctness of your AI pipeline, ensuring that your product operates within specific and well-scoped uses. This approach can turn potential drawbacks into unique selling points in industries where there isn't necessarily a "wrong" answer.
- Differentiating AI Pipeline & Evaluating Teams: As we move into an era where foundational AI models dominate, it's crucial to focus on building around these models and optimizing them for specific tasks.
- Differentiation can be achieved through methods like prompt engineering, fine-tuning models, and post-processing results.
- When building teams, founders should look beyond the hype and consider hiring experienced infrastructure engineers who can help incorporate AI technology into products efficiently and sustainably.
- The key is to strike a balance between being cutting-edge and building a sustainable business infrastructure.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Banks and API Ecosystem Strategies
CCG | Kate Drew | May 11, 2023
According to CSI’s 2023 Banking Priorities Survey, the number one strategy banks are pursuing when it comes to their open API ecosystems is offering third-party products/services to customers.
Three key take-aways:
1. Banks Prioritize Third-Party Offerings: According to the CSI's 2023 Banking Priorities Survey, banks are increasingly focusing on offering third-party products/services through their open API ecosystems. This best-of-breed approach enables them to provide solutions tailored to specific functions or use cases, rather than solely relying on a single vendor. This strategy helps banks to differentiate themselves in a highly competitive market.
See: McKinsey: Reshaping Retail Banks for the Digital Battlefield
2. Potential Missed Opportunities: Despite the push towards third-party offerings, banks may be neglecting other important aspects of API strategy. Data shows that only 21% of banks are embedding their data, products, and services into third-party workflows, and only 16% are offering APIs for third parties to access their data. As open banking regulations are likely to increase, banks might be missing out on important opportunities by not broadening their API strategies.
3. Importance of a Holistic Strategy: It's crucial for banks to develop a comprehensive and long-term strategy when approaching API ecosystems. While it's positive that 66% of US banking leaders are including an interoperability layer or API gateway in their modernization strategy, forethought and planning are key. Without a well-thought-out strategy, there's a risk of building solutions that may not fully utilize the potential of API ecosystems, leading to missed opportunities and potential inefficiencies.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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OSFI Stakeholder Engagement: Help Shape the Future of Finance
OSFI | May 11, 2023
Image: Unsplash/David Hofmann
Digital Innovation Open Door
- We will be hosting a series of stakeholder engagement opportunities. This initiative will allow industry and the Office of the Superintendent of Financial Institutions to have open discussions on digital innovation topics.
- Uncover fintech innovations: Whether you work for an established entity or start-up, a corporation, association, a regulatory authority or anything in between, we want you to take part in our Digital Innovation Open Door. We’re interested in discussions to advance our regulatory and supervisory functions. This initiative offers you the opportunity to provide insight that could potentially help shape the future of finance regulation in Canada. If you have a potential viable concept, we may invite you to test your product in our “digital innovation sandbox”. Here are a few examples of organizations we’d like to engage with in this initiative:
- Academia
- FinTech/BigTech
- Corporations working in the digital innovation space
- Federally regulated financial institutions
- Industry associations
- Regulatory authorities
See: Speech by OSFI Superintendent Peter Routledge: Looming risks and long-term resilience
- We have a particular interest in the following topics:
- Artificial intelligence
- BigTech
- Cryptoassets
- Custody
- Distributed ledger technology
- FinTech
- Open finance
- Quantum computing in financial services
- Risk management of machine learning in third parties
- Sandbox
- Smart contracts
- Tokenization of assets
- How to register: Register here!
- When you register, please provide as much detail as possible, as this will allow us to bring the appropriate subject matter experts to those meetings. We’re planning to start meetings on June 14, 2023, dependent on the number of expressions of interest received. We’ll host this initiative virtually.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Protecting Financial Privacy in the Digital Age: Crafting a Stronger Framework
Cato Institute | Nicholas Anthony | May 2, 2023
Image: Pixabay/Geralt
- Financial privacy in the United States has been deteriorating over the past 50 years, with the third-party doctrine and Bank Secrecy Act weakening Fourth Amendment protections.
- The Right to Financial Privacy Act, enacted in 1978, provides some protections but is undermined by numerous exceptions. A revised legal and regulatory framework must protect against warrantless searches and seizures.
- Congress should amend the Right to Financial Privacy Act to remove exceptions, requiring government agencies to obtain warrants or subpoenas and notify Americans when accessing their financial information. This is necessary to restore financial privacy, particularly in the digital age.
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See: Financial Privacy: SEC Launches Enormous Database Compiling All Stock Trades
- Several key recommendations to establish a stronger framework for financial privacy in the United States.
- These include removing exceptions to the protections of the Right to Financial Privacy Act, eliminating 26 U.S.C. Section 6050I, strengthening the formal written requests provisions of the Act;
- Repealing the Bank Secrecy Act or at least its customer reporting requirements; R
- equiring inflation adjustments to reporting thresholds;
- Publicly reporting the effectiveness of suspicious activity and currency transaction reports; and
- Enacting protections for two-party transactions, such as peer-to-peer exchanges and self-hosted wallets, to prevent further encroachment of financial surveillance on Americans' privacy.
- Holding cryptocurrency in a “self‐hosted” wallet is merely the digital equivalent of holding physical cash in a traditional wallet. It gives the owner complete control over what’s held inside it and, to the extent that they want to do so, the ability to maintain their privacy. Congress should not let financial surveillance further encroach on Americans’ privacy by being expanded to cover self‐hosted wallets and peer‐to‐peer exchanges.
See: Office of the Privacy Commissioner Announces Digital ID Ecosystem Resolution to Ensure Transparency and Privacy
- It is time to reconsider the third‐party doctrine, the reasonable expectation of privacy, and financial privacy. “Having technology” in the 1970s meant having a television and an electric typewriter. Less than 20 percent of families had a credit card issued by a bank. Today, Americans use credit or debit cards for nearly all purchases, acquire loans directly on their phones, and leave a digital trail nearly everywhere they go. So, while such financial records may have offered only limited insights into one’s life in the 1970s, these financial records now offer a full, detailed representation of one’s life.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Industry Thinks Feds Are Trying to Kill Crypto, White House Denies It
Intelligencer | | May 1 2023
Image: Unsplash/Ricardo Arce
Are the Feds Trying to Kill Crypto?
- Protego Trust, founded by a lawyer turned venture capitalist, was betting big that it could be the squeaky-clean, bona fide bank that crypto needed to win Wall Street’s business. It had spent $80 million pursuing a coveted approval for a national trust charter, winning conditional approval in 2021. It then raised more than $100 million — at a reported $2 billion valuation — from big crypto companies, including Coinbase.
- “We courted regulation. We did everything that was required in order to build a pristine financial institution to serve the most discerning institutional clients,” says Protego founder Greg Gilman. But when Protego told the OCC in February that it had completed all of the agency’s requirements for full approval, its application was denied on a technicality — one that the OCC had never mentioned before, according to a person familiar with the situation.
- It has led to an almost universal conviction that financial regulators are purposefully trying to put them out of business — not by barring them explicitly but rather through the recent appearance of a web of policies, both written and unwritten, that together make it unfeasible or impossible for crypto firms to operate in the U.S.
- Critics tend to see as neither legitimate nor productive — are now calling what’s happening to crypto “Operation Choke Point 2.0.” Indeed, the Gensler-led crackdown over the past six months has, according to many in the sector, pushed things to a crisis point, forcing a desperate decision: Fight against the federal government or flee the country.
See: 16z: 2023 State of Crypto (and Index)
Sheila Warren, CEO of the Crypto Council for Innovation:
I think all the conspiracy theorists are definitely onto something. There is enough circumstantial evidence to say, ‘Oh yeah, that’s a real thing.
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Decrypt | André Beganski | Mar 2, 2023
The Democratic presidential candidate endorsed the view that recent turmoil in the U.S. banking sector was fallout from a "war on crypto."
- Democratic presidential candidate Robert F. Kennedy Jr. has criticized the perceived "war on crypto" waged by the FDIC and SEC, claiming they lack authority to do so. Kennedy opposes a U.S. central bank digital currency and argues that this war on crypto negatively impacts major banks.
- Referencing an article written by Ellen Brown titled “How the War on Crypto Triggered a Banking Crisis,” Kennedy said Brown makes a “strong case” that a government-led campaign against the digital assets industry led to several historic bank failures in March, specifically Silicon Valley Bank, Signature Bank, and Silvergate Bank.
- Whether or not there’s a concerted effort to uproot crypto from the U.S. financial system is a contentious topic.
FFCON23 Video: Strategies for Canadian Fintech Companies Amidst Regulatory Crackdowns
- The Federal Reserve issued clarity days after Kennedy’s anti-CBDC remarks, saying the launch of its FedNow payments system is neither a digital currency nor a replacement for cash, which Kennedy appeared to conflate with a CBDC.
- While certain Democrats like Elizabeth Warren have slammed crypto numerous times and made criticism of the industry a key pillar of their political platform
Ellen Brown makes a strong case the FDIC/SEC war on crypto caused failures of SVB, Signature, and Silvergate banks. FDIC and SEC have no authority to wage an extra-legal war on crypto that leaves major banks as collateral damage. #Kennedy24https://t.co/HMZuW7Rr1H
— Robert F. Kennedy Jr (@RobertKennedyJr) May 2, 2023
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Blockchain Smart Bonds
Coindesk | Anthony Bufinsky | Apr 19, 2023
Image: Unsplash/Shubham Dhage
Smart bonds can transform the life cycle of debt instruments and have the potential to disrupt debt capital markets.
- Smart bonds – digital bonds stored on a distributed ledger – are an emerging application of the technology wherein each bond has a unique digital signature that verifies ownership and eliminates the need for physical certificates. Blockchain ensures all transactions are recorded and stored permanently, making it difficult for anyone to steal or alter the bond's value without detection.
- This digitalization of bonds may enhance process efficiencies and liquidity, reduce costs, simplify and democratize capital raising for issuers, and create a broader investable landscape.
Citi Report: Blockchain’s Next Billion Users: Money, Tokens, Games
- Benefits: Smart bonds can also significantly reduce the need for intermediaries (using a tokenization platform), such as banks, brokers, and clearinghouses thus eliminating (reducing) associated fees and the overall cost of bond management services.
- Smart contracts can be coded with bond details and stored on blockchain, providing transparency and authenticity.
- Smart bonds can be allocated to investors and payment is automatically deducted, settling the transaction simultaneously for all investors.
- Smart contracts can automate clearing and settlement processes, reducing the time required to complete tasks and the likelihood of a price change.
- Smart contracts can automate interest payments and return of principal at maturity, reducing counterparty risk and ensuring timely payments.
- Perceived risk of security breaches for smart bonds?
- Unlike cryptocurrencies, smart bonds are not bearer assets and ownership is registered on the blockchain.
- Fraudulent transfers of smart bonds can be invalidated, and ownership may be recorded with transfer agents.
- Transfer agents decrease decentralization but help safeguard customer assets by facilitating freezing, cancellation or replacement of tokens in case of a mistake or attack.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Progress Stablecoin Legislation or Risk the Financial Future
Cato Institute | Jack Solowey | Apr 20, 2023
Yesterday, the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Inclusion held a hearing on stablecoins (cryptocurrencies pegged to the value of an asset like the dollar).
- The committee deserves recognition for taking the all‐important first step: admitting we have a problem. Witnesses largely agreed on the shortsightedness of U.S. hostility to decentralized financial technology and the need for regulatory clarity, comments from lawmakers indicated that a common‐sense solution on stablecoins, unfortunately, remains far off.
- A bill posted on the committee’s website before the hearing—a draft stablecoin framework that first circulated last fall—needs work if it is to rein in the excessive regulatory discretion that hinders a competitive stablecoin market and undermines American developers and consumers.
- To their credit—Subcommittee Chairman French Hill (R‑AR) and Committee Chairman Patrick McHenry (R‑NC) acknowledged that the bill is but a jumping off point for future revisions—an “infant” in Rep. Hill’s words (and an “ugly baby” in Rep. McHenry’s phrasing from last fall).
See: OpEd: Draft U.S. Bill on Stablecoins Highlight Differences with CBDCs
- How to achieve sensible stablecoin legislation?
- A stablecoin bill will need to embrace competition from new entrants. This can be accomplished by reducing the regulatory discretion that disserves U.S. businesses and users, avoiding overreactions to experimental instruments, and opening the doors to non‐traditional market participants.
- A stablecoin bill should not grant regulators open‐ended leeway to reject the applications of stablecoin issuers. Instead, legislation should focus on objective criteria related to reserve assets and disclosures rather than vague factors like a project’s future benefits, contribution to financial stability writ large, overall convenience, or ability to promote financial inclusion.
- A stablecoin bill should simply address stablecoins’ primary risks and financial risk in business: that fiat asset‐backed projects have the reserves and redemption policies they claim to.
- Lastly, stablecoin legislation should allow flexibility when it comes to the types of businesses issuing stablecoins.
- Not only should non‐bank and state‐chartered entities be allowed to become lawful issuers, but so too should businesses from diverse sectors, including those traditionally outside of finance.
- Preventing companies with other lines of business from issuing stablecoins—or affiliating with those doing so—would risk further constraining financial inclusion and competition.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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